06x11: Benefits Secured by Government Contract and Gift Prohibition

This is in response to your November 30, 2006, letter requesting the Office of Government Ethics’ (OGE) views on whether the employees of [your agency] may accept [a certain] Corporation’s offer to participate in its Employee Purchase Program (EPP). As explained in your letter and in subsequent conversations with staff, the program would provide all [agency] employees, regardless of position, with the opportunity to purchase [the Corporation’s] products for personal use at a discounted price. These conversations also indicated that the discount is only available to agencies that purchase a certain number of licenses from [the Corporation]. As discussed in more detail below, the ethics rules do not prohibit [agency] employees from participating in the [Corporation’s] EPP if you determine it to be a benefit secured by a Government contract; however, we would encourage you to take steps to avoid the appearance of preferential treatment or endorsement of [the Corporation]. We also caution that there may be appropriations restrictions that prevent the [agency] from accepting the program, but we cannot comment definitively because those issues are outside the jurisdiction of OGE.

Employees are generally prohibited from accepting gifts, including discounts, offered by a prohibited source or given because of their official position by the Standards of Ethical Conduct for Employees of the Executive Branch. 5 C.F.R. § 2635.202(a)(1) and (2). Employees, however, may accept goods that are procured by the Government under a Government contract because the gift prohibition no longer applies. 5 C.F.R. § 2635.203(b)(7). This is so because items secured under a Government contract are benefits to the employee from the Government, rather than a gift from a prohibited source. 57 Fed. Reg. 35006 (Aug. 7, 1992). A determination as to whether a benefit is secured by a Government contract is within the discretion of the employing agency or department. OGE Informal Advisory Memorandum 99 x 1. Thus, it is up to the [agency] to determine whether the [Corporation’s] EPP is a benefit secured by a Government contract. If the [agency] determines that the [Corporation’s] EPP is such a benefit secured by a Government contract, [the agency’s] employees may participate in the program without violating the ethics gifts rules.

Employees also are required to act impartially, giving no preference to any private organization or individual. 5 C.F.R. § 2635.101(b)(8). Employees generally may not use or permit the use of their Government positions or titles to endorse any product, service or enterprise. 5 C.F.R. § 2635.702(c)(1). Thus, while acceptance is not necessarily prohibited, we recommend that any literature or information provided to employees about the [Corporation’s] EPP also include information about other vendors who offer similar products. This could help to avoid the appearance that the [agency] is giving preferential treatment to or providing an endorsement of [the Corporation’s] products over other similar products. In addition, the [agency] may want to consider including a disclaimer on documents or websites that feature information about the [Corporation’s] program to clarify that the [agency] is not endorsing [the Corporation] or its products.

In conclusion, while it is up to the [agency] to determine whether the [Corporation’s] EPP is a benefit secured by a Government contract, making it permissible under the ethics gift rules, we caution that there may be restrictions on the use of appropriated funds that would limit or prohibit the [agency] from accepting the [Corporation’s] EPP. We recommend that the [agency] investigate further any appropriations restrictions on employee purchase plans before allowing employees to participate in the purchase program. We also suggest that [the agency] take steps to reduce the appearance of preference or endorsement of [the Corporation] as discussed above.

We hope that you have found this information helpful. Please do not hesitate to contact my staff if you have further questions.